<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 0-16631
BOCA RATON CAPITAL CORPORATION
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-2763089
(State or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
6516 Via Rosa, Boca Raton, FL 33433
(Address of principal executive offices)
(407) 750-2252
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,125,270 shares as of November 8,
1996.
<PAGE> 2
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - 3
September 30, 1996 and December 31, 1995
Consolidated Statements of Operations -
Three and Nine Months Ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements - 6
Item 2 Management's Discussion and Analysis - 8
PART II OTHER INFORMATION
Item 3 Defaults Upon Senior Securities 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Item 6 Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit Index 12
</TABLE>
<PAGE> 3
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1996 1995
ASSETS Unaudited Audited
---------- ----------
<S> <C> <C>
Cash and cash equivalents $ 953,463 $2,900,888
Portfolio investments at fair value -- 1,089,375
Other 17,500 --
---------- ----------
Total assets $ 970,963 $3,990,263
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable and accrued interest $ -- $ 588,029
Accounts payable and accrued expenses 53,981 126,220
---------- ----------
Total liabilities 53,981 714,249
---------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value; authorized 40,000,000
shares; issued and outstanding, 1,125,270 shares
at September 30, 1996 and December 31, 1995, respectively 1,125 1,125
Additional paid-in capital 4,002,937 6,534,795
Accumulated deficit (3,087,080) (3,259,906)
---------- ----------
Total stockholders' equity 916,982 3,276,014
---------- ----------
Total liabilities and
stockholders' equity $ 970,963 $3,990,263
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the nine and three months ended September 30, 1996 and 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
----------------------------- ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment income :
Interest income $ 32,407 $ 87,114 $ 4,904 $ 36,801
Gain on debt compromise 278,026 -- -- --
Other -- 29,213 -- --
----------- ----------- ----------- -----------
310,433 116,327 4,904 36,801
----------- ----------- ----------- -----------
Operating expenses:
General and administrative 208,517 109,280 56,846 32,227
Legal 66,577 52,101 37,773 (2,462)
Audit and tax 15,825 31,100 3,450 5,250
Interest 2,937 18,000 -- 6,000
----------- ----------- ----------- -----------
Total operating expenses 293,856 210,481 98,069 41,015
----------- ----------- ----------- -----------
Operating income (loss) 16,577 (94,154) (93,165) (4,214)
----------- ----------- ----------- -----------
Realized and unrealized gains on investments:
Net increase in realized appreciation of
investments 1,245,000 1,504,928 -- 705,836
Net increase (decrease) in unrealized
appreciation of investments -- (673,833) -- (847,398)
----------- ----------- ----------- -----------
Realized and unrealized gain (loss) 1,245,000 831,094 -- (141,563)
on investments
----------- ----------- ----------- -----------
Net income (loss) before income tax 1,261,577 736,940 (93,165) (145,777)
Provision for income taxes -- 20,300 -- 20,300
----------- ----------- ----------- -----------
Net income (loss) $ 1,261,577 $ 716,640 $ (93,165) $ (166,077)
=========== =========== =========== ===========
Earnings per share:
Weighted average number of shares 1,125,270 1,125,270 1,125,270 1,125,270
========= ========= ========= =========
Net income (loss) $ 1.12 $ 0.64 $ (0.08) $ (0.15)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,261,577 $ 716,640
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Decrease in appreciated value of investments -- 673,833
Gain on sale of investment (1,245,000) (1,504,928)
Gain on debt compromise (278,026) --
Increase in other assets, net (17,500) (53,087)
Decrease in accounts payable and accrued expenses (72,243) (279,833)
----------- -----------
Net cash used in operating activities (351,192) (447,375)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of investment 1,245,625 2,027,983
----------- -----------
Net cash provided by investing activities 1,245,625 2,027,983
----------- -----------
Cash flows from financing activities:
Principal payments on notes payable (310,000) --
Dividend paid on common stock (2,531,858) --
----------- -----------
Net cash used in financing activities (2,841,858) --
----------- -----------
Net increase (decrease) in cash (1,947,425) 1,580,608
Cash, beginning of period 2,900,888 1,331,744
----------- -----------
Cash, end of period $ 953,463 $ 2,912,352
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during the year for interest $ 2,937 $ --
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The consolidated financial statements of Boca Raton Capital Corporation
and Subsidiaries (the Company) included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of management, the consolidated financial statements
contain all adjustments which are of a recurring nature, and disclosures
necessary to present fairly the consolidated balance sheets of the Company as of
September 30, 1996, and December 31, 1995 , the related consolidated statements
of operations for the nine months ended September 30, 1996 and 1995 , and the
consolidated statements of cash flows for the nine months ended September 30,
1996 and 1995.
The Company was a non-diversified, closed-end investment company, which
had elected and was granted the status as a Business Development Company ("BDC")
under the Investment Company Act of 1940 (the "1940 Act"). During 1995, the
Company's Board of Directors were of the opinion that the shareholders' return
on assets was not sufficient to continue operations as a BDC. As such, the
Company's election to withdraw from its status as a BDC was filed with the
Securities and Exchange Commission and became effective on December 22, 1995. It
is the Company's current intention to seek to be merged with an operating
company. No material impact to the financial statements resulted from the change
of status.
NOTE 2: VALUATION OF PORTFOLIO INVESTMENTS
During 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, " Accounting for Certain Investments in Debt and
Equity Securities." Under SFAS No. 115, investments are classified as either
held to maturity, trading or available for sale depending upon whether the
investment is a debt or equity security and management's intent with regards to
the investment. The Company's investment in RailAmerica had been classified as
trading which calls for the investment to be carried at fair value and changes
in market value be credited or charged to income. Investments for which market
quotations are readily available are valued at market. In the absence of market
quotations, investments are valued as determined in good faith by the Board of
Directors. Due to the inherent uncertainty of this valuation, these estimates
may differ significantly from the values that would have been used had a ready
market for the investments existed. Although SFAS No. 115 generally does not
apply to restricted securities, it was management's belief that the restrictions
on the resale of the RailAmerica shares would be removed within the next year.
As a result of this, SFAS No. 115 was applicable for the year ended December 31,
1995.
6
<PAGE> 7
NOTE 2: VALUATION OF PORTFOLIO INVESTMENTS - continued
For the periods prior to this year, this change had no material impact on the
results of operations of the Company because under its status as a BDC for part
of 1995, the Company valued its investments in the same manner as required by
SFAS No. 115.
NOTE 3: INCOME TAXES
For income tax purposes, the Company had a change in ownership during
1993 in connection with its private placement offering. The change in ownership
results in an annual limitation on the amount of pre-change ownership net
operating loss carryforwards which can be utilized to offset the Company's
future taxable income. The annual limitation is approximately $128,000 and will
be increased by the Company's pre-change built in gains when recognized.
As of December 31, 1995, the Company has available for federal income
tax reporting purposes pre-change net operating losses of approximately
$3,086,000 and post-change net operating losses of $381,000. The net operating
loss carryforwards expire in years 1998 through 2008.
7
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The Company reported net income of $1,261,577 and $716,640 for the nine
months ended September 30, 1996 and 1995, respectively. Included in net income
for the nine months ended September 30,1996 and 1995 was a net increase of
$1,245,000 and $1,504,928, respectively, in the realized appreciation of
investments. The balance of net income consisted of investment income of
$310,433 and $116,327 less operating expenses of $293,856 and $210,481 for the
nine months ended September 30, 1996 and 1995, respectively.
Total investment income of $310,433 for the nine months ended September
30, 1996, consisted of a gain on debt compromise of $278,026 and interest income
of $32,407. This is compared to total investment income of $116,327 for the nine
months ended September 30, 1995, which was comprised of interest income of
$87,114 and other income of $29,213.
Operating expenses for the nine months ended September 30,1996
consisted of general and administrative expenses of $208,517, professional fees
of $82,402 and interest expense of $2,937. Such expenses for the comparable
period of 1995 consisted of general and administrative expenses of $109,280,
professional fees of $83,201 and interest expense of $18,000. The increase of
$99,237 in general and administrative expenses was primarily a result of the
payment in January 1996 of an annual retainer fee for 1996 of $10,000 per
director ($50,000 in the aggregate), an increase from $5,700 to $8,500 per month
in the aggregate monthly fees paid to two officers of the Company and costs
related to a special meeting of shareholders.
For the three months ended September 30, 1996, the Company reported a
net loss of $93,165. The net loss was comprised of interest income of $4,904
offset by $98,069 of operating expenses.
For the three months ended September 30, 1995, the Company reported a
net loss of $166,077. Included in the net loss was a net decrease in the
unrealized appreciation of investments of $847,398 and a net increase in the
realized appreciation of investments of $705,836, in the Company's investment in
RailAmerica. The balance of net income consisted of a loss of $4,214 on total
investment income of $36,801 of interest income, less operating expenses of
$41,015.
Operating expenses for the three months ended September 30, 1996
primarily consisted of general and administrative expenses of $56,846 and
professional fees of $41,223. Such expenses for the comparable period of 1995
consisted of, general and administrative expenses of $32,227 and $2,778 of
professional fees.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company has $953,463 in cash and cash equivalents and total
liabilities of $53,981 at September 30, 1996. The Company has no liabilities due
longer than twelve months.
The Company has no sources of cash flow at present apart from interest
income. The Company has minimal current operating expenses.
At September 30, 1996 the Company did not maintain lines of credit, and
none are anticipated.
On March 11, 1996, the Company paid a special cash distribution (the
"Special Distribution) of $2.25 per share on each share of Common Stock
outstanding of record on January 11, 1996. The special cash distribution was
declared, by the Board of Directors, subject to shareholder approval, on January
11, 1996. The Company's shareholders approved the Special Distribution at the
1996 Special Meeting held on February 29, 1996. See "Item 4 - Submission of
Matters to a Vote of Security Holders." The payment by the Company of dividends,
if any, in the future rests within the discretion of its Board of Directors,
subject to shareholder approval, and will depend upon, among other things, the
Company's earnings, its capital requirements and its financial condition, as
well as other relevant factors. Except for the Special Distribution, the Company
has not paid any cash dividends since its inception and does not intend to pay
any cash dividends on the Common Stock in the foreseeable future, but presently
intends to retain all earnings, if any, for use in its business operations.
On May 15, 1996, the Company sold 375,000 shares of RailAmerica which
constituted all of the Company's remaining equity interest in RailAmerica for
approximately $3.42 per share (aggregate of approximately $1,285,625 gross
proceeds).
On May 23, 1996, the Company paid $310,000 to Woodoven Corporation as
payment in full of all principal and interest due and payable pursuant to a
promissory note dated April 5, 1990. As a result the Company recognized a gain
on debt compromise of $278,026 in the quarter ended September 30, 1996.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the first quarter of fiscal 1996, the approval of a special cash
distribution (the "Special Distribution") of $2.25 per share of common stock of
the Company, $.001 par value per share ("Common Stock"), payable out of the
Company's capital surplus, on each share of the Common Stock outstanding of
record at the close of business on January 11, 1996 was submitted to a vote of
security holders at a special meeting (the "1996 Special Meeting") of
shareholders held on February 29, 1996. At the 1996 Special Meeting, the
shareholders approved the Special Distribution. The Special Distribution was
paid by the Company on March 11, 1996. The record date for the 1996 Special
Meeting was the close of business on January 11, 1996. On that date, the Company
had 1,125,270 shares of Common Stock outstanding. There were 941,612 shares
present in person or represented by proxy at the 1996 Special Meeting. The
shares present in person or represented by proxy were voted as follows: Proposal
- - - Special Distribution
<TABLE>
<CAPTION>
In Favor Against Abstained Unvoted
-------- ------- --------- -------
<S> <C> <C> <C>
940,916 85 611 None
</TABLE>
There were an aggregate of 611 broker non-votes and abstentions. Broker
non-votes were treated as shares present and entitled to vote at the 1996
Special Meeting for determining whether a quorum was present. However, broker
non-votes were not considered as votes cast at the 1996 Special Meeting.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits 27.3 - Financial Data Schedule
(b) On May 30, 1996 the Company filed a report on Form 8-K in connection with
its sale of 375,000 shares of common stock of RailAmerica which constituted all
of the Company's remaining equity interest in RailAmerica for approximately
$3.42 per share (aggregate of approximately $1,285,625 gross proceeds).
10
<PAGE> 11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 8, 1996 /s/ Alan L. Jacobs
-----------------------------
Alan L. Jacobs, President
(Principal Executive Officer)
Date: November 8, 1996 /s/ Franklyn B. Weichselbaum
-----------------------------
Franklyn B. Weichselbaum
Chief Financial Officer & Treasurer
11
<PAGE> 12
EXHIBIT INDEX
-------------
Exhibit
- -------
27.3 Financial Data Schedule
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 953,463
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 970,963
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 970,963
<CURRENT-LIABILITIES> 53,981
<BONDS> 0
0
0
<COMMON> 1,125
<OTHER-SE> 915,857
<TOTAL-LIABILITY-AND-EQUITY> 970,963
<SALES> 0
<TOTAL-REVENUES> 1,555,433
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 293,856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,937
<INCOME-PRETAX> 1,261,577
<INCOME-TAX> 0
<INCOME-CONTINUING> (261,449)<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,261,577
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
<FN>
<F1>The Company had income-pretax of $1,261,577 which included a gain on debt
compromise of $278,026 and a realized gain of $1,245,000 on the sale of equity
securities of RailAmerica, Inc. The realized gain does not constitute income
from continuing operations because the Company no longer owns any securities
and has no current intention of acquiring securities for investment
purposes in the future.
</FN>
</TABLE>
